Expenditures and Recommendations

  Date: 30 Sept, 1828

Economic Report

Section 2: Expenditure and Recommendations

Expenditure Table for 1827: Expenditure Explanation Allocation Amount Military expenditures Military hospitals, sieges, weapons, soldier sustenance, war equipment, military salaries V: 979110 NG: 1529860 E: 550749 3,059, 721 Cost of diplomatic agents in foreign lands V: 59167 NG: 92449 E: 33281 184,899 Civil salaries V: 159360 NG: 249000 E: 89640 498,000 Salaries of the govt executive V: 556806 NG: 870010 E: 313203 1,740,020 Education Universities V: 46602 NG: 870010 E: 26213 145,632 Education Primary + secondary 45,639 Interest V: 116551 NG: 182111 E: 65559 364,222 supporting congress (all costs) V: 31424 NG: 49100 E: 17676 98,200 Navy expenditures (cut by half because fleets are morph balled in port) V: 398269 NG: 622296 E: 224026 1,244,593 Payment owed to creditors of the Patria Boba disputed between who owes what 5,097,389 ecclesiastical mortgages censos 1,400,536 Owed to Panama 656,847 Owed to Guayaquil 100,000 Payment owed to past military veterans and personnel 116,890 total debt including all other loans and interest V: 4,720,741 NG: 7,376,159 E: 2,655,417 14,752,318 Note on Revenue: Actual revenue is less than predicted revenue because the tax collection process is very inefficient. Very few workers are willing to take the job of tax collector, because tax collection is hard. What is hardest is pinning down the total income and asset value of taxpayers, and getting taxpayers to pay calculated tax amounts. Solving corruption, tax evasion and employing tax collection workers should be the government's priority.  Expenditure The given numbers show how much each cabinet owes to pay for the running of government. A decision needs to be made about how these expenditures will be split between the different government units. The governments need to balance the books, otherwise the government will need to shut down. It is not clear which cabinet will pay what, because of the new constitution.  Financial Committee’s recommendations: The financial committee’s expert opinion is that the government should be seriously warned of a looming debt crisis. Our expenditure far exceeds our revenues, and these are financed by loans. However, this debt will turn into a crisis very soon into the future. In order to prevent this devastating financial crisis, there are, according to the financial committee, four main ways forward. We highly recommend that a combination of these solutions should be enacted immediately to save the Colombian economy.  Increasing Income Taxes This will increase our revenue, and hence solve the debt crisis. Some of the wealthiest aristocrats currently face low taxation rates. However, increasing taxes on them, or in general, is likely to make local citizens angry. So, if the convention decides to increase income taxes, you must think about how publically acceptable such a solution will be.  Take out funding from the church Church expenditures form a large part of current expenditures. Cutting these expenses will help to soften the blow of the financial crisis greatly. However, this solution, again, may not be politically acceptable by everyone.  Cut Military Expenditures Military expenditures form the largest bulk of revenues, and the cabinet needs to find a way to cut these out if it wants any possibility of avoiding a crisis. The best way to do this would be for the centre and the regions to work together.  Destroy Navy The Navy is also a huge drain on the economy, and it is questionable the extent to which it adds value to the Republic of Colombia. To avoid the crisis, cutting down Navy expenditures may also help.